Announcement Effect Of Rights Issue On Stock Returns: A Study Of Selected Indian Manufacturing Companies | Madhuri Malhotra, M. Thenmozhi & G. Arun Kumar

This paper examines ordinary share price abnormal returns reaction to announcements of rights issues in the Indian Stock Market. This paper also examines Information hypothesis, Price pressure hypothesis, Market condition hypothesis and Semi strong form efficient market hypothesis. The event study technique has been used along with Multivariate Regression Analysis. The results of the study show that Indian stock market reacts positively to the announcement of rights issue and there is no information leakage prior to the rights issue in India. There is little evidence on the Indian stock market being semi strong form efficient. There is no evidence to support the Market condition hypothesis and Information hypothesis but there is evidence of Price pressure hypothesis.